Questions You Should Be Asking When Creating a Technology POC

If you’ve been tasked with finding the right technology solution for your family office, you know that a lot is on the line. You know that selecting the right technology solution can improve your family office’s efficiency and catapult your credibility as a decision maker – and selecting the wrong technology solution can put you in the hot seat.

Beyond asking the right questions, it’s important to remember: it’s not enough to take the vendor’s word for what they can do for your family office – they need to prove what they can do for your family office.

One of the best ways to accomplish this is through a well-crafted proof of concept (POC).

POCs allow you to take a deeper dive into the software application, which enables you to determine whether or not the platform’s capabilities can really address your biggest pain points. Furthermore, if proven successful, POCs offer tangible evidence that can be used to help you get buy-in for the investment within your family office and from the family itself.

However, as a family office fintech provider that’s been on the receiving end of thousands of technology evaluations and inquiries over the past two decades, we oftentimes hear family offices ask: what is the best way to come up with a proof of concept?

While there are lots of different ways to conduct a POC, we’ve identified four steps to help you construct a basic outline for a successful proof of concept.

Step 1: Create a proof of concept introduction

The first thing to consider when creating a proof of concept is outlining who you are as a firm and what you hope to accomplish with the POC. This may seem like a no-brainer to most – after all, we know who we are and what we need, don’t we? Truth be told, it’s one of the most overlooked components of a POC but provides your potential technology vendor with tremendous context around the complexity and logic of your processes and operations.

At this stage, it’s also important to provide detail around expectations and deliverables for the POC including goals, timeline and response format.

Step 2: Define your firm's most critical pain points

If you’re going through a family office software selection, we’re sure you already have a laundry list of challenges and inefficiencies you want to address with a new technology solution. But it’s important to narrow the scope in your POC so that the responding vendors can prioritize your biggest pain points and avoid getting bogged down with demonstrating the “nice-to-have” functionality.

At this point, you should be thinking in broad topics and we recommend limiting the scope of your POC to 5-8 pain points.

Examples of common pain points include accounts payable, partnership allocations and alternative asset tracking. As you and your team think through your operations, make sure to account for the volume, regularity and complexity of each pain point to make sure you’re including the most relevant and worthwhile set of scenarios in the POC, which we discuss in the next step.

Step 3: Describe the current and future state of operations

Once you’ve identified your generalized pain points, you can begin mapping each pain point to specific operations and tasks. The goal during this step is to describe how you currently execute these functions and what your expectations are for the future so that you can determine which specific tasks should be included in the use cases.

For instance, if the accounts payable function has been identified as a troublesome spot for your family office, begin outlining the explicit tasks that are challenging. Start by asking yourself which tasks are most difficult or cumbersome to complete: Is it check writing? Is it wire transfers? Is it tracking and reporting on expenses? Is it securely storing AP data like invoices and electronic signatures?

By letting the vendors know where your trouble spots lie, they can more effectively assert value over your current process, which ultimately helps you build buy-in towards the technology solution.

Step 4: Provide detailed use case scenarios

Using the list of tasks associated with each pain point, you can devise concrete examples and requirements for delivering on each component in the POC.

In many cases, your technology vendor may already have scenarios and sample data sets configured to prove out their capability. In other cases, the pain point may be so specific or the requirement so detailed that it makes sense to provide mocked up data for the technology vendor. If you plan to provide sample data, keep in mind whatever data you provide is what the technology vendor will replicate in their system, so make sure that it is accurate and complete before launching your POC.

Whether your family office is managing the due diligence process on its own or partnering with an experienced industry consultant, a POC gives your firm an opportunity to put technology vendors to the test as they vie to win your business. As a result, you are able to attest to the solution’s capabilities and verify that the vendor can, in fact, help alleviate your biggest pain points.

Download our mini ebook Family Office Tech Evaluation: Building a Successful Proof of Concept, which lays out four steps to help create a proof of concept and the questions you should be asking to help get you there.

How Family Offices and Financial Institutions Can Use Digital Reporting to Engage the Next Generation of High-Net-Worth Clients

The world of high-net-worth private wealth management is changing rapidly. Over the next 25 years we will see a change of the guard as $68 trillion shift from current wealth owners to heirs and charities according to the 2018 Cerulli report on high-net-worth and ultra-high-net-worth markets. According to the same report, by the end of the 25 years, Gen Xers will replace Baby Boomers as the wealthiest generation.

With this transition of wealth will come a new wave of expectations that will force many family offices and financial institutions to evaluate how they deliver their private wealth management solutions.

Andrew Fay, Senior Vice President of Fidelity Family Office Services, addressed the importance of finding near-term solutions that bridge the gap between current and future wealth holders.

More than ever, single-family offices and their executives must ensure they are aligned with the evolving needs of the family and staying relevant in an ever-changing world. In our opinion, offices need to consider how to stay one step ahead, accelerate their pace of change and find creative solutions to help the current family and future generations fulfill their ambitions.

– Andrew Fay, Senior Vice President, Fidelity Family Office Services

Whether these solutions tackle how you communicate with your clients or how you manage and report on their assets, family offices and financial institutions will be forced to adapt to the next generation of wealth holders.

Our focus is on the latter: reporting – specifically digital reporting – for high-net-worth clients.

Here are some best practices to help you transition your legacy reports into modern, digital reporting tools.

Get Ahead of the Curve

While the Great Wealth Transfer is certainly underway, it’s important to note that it’s not going to happen overnight. So, for most, the introduction of digital technology is two-fold.

On one hand, digital reporting needs to be available today in order to retain the next generation of wealth holders tomorrow. According to Financial Advisor magazine, between 66% and 90% of next-generation heirs leave behind their parents’ financial advisor soon after receiving their inheritance. By developing a digital strategy ahead of time, you can build relationships with the next generation and avoid finding yourself somewhere behind the eight ball.

On the other hand, you will likely still have a cohort of clients that prefer their financial reporting right where they can feel it: in their hands. Quite frankly, sometimes that’s just the way it is. But with today’s array of reporting tools for family offices and financial institutions, you can more often than not serve both contingencies – the ones that embrace technology and the ones that rebuke it – using a single platform.

For instance, the Archway Platform℠ features an integrated batching and scheduling tool that offers multiple ways to deliver client reporting including:

• Printed, hard-copy reports
• Digital reports shared via email, FTP or document manager
• Interactive dashboard-style reporting delivered via a client portal

With a variety of flexible reporting options, family offices and financial institutions can implement the right solution for each individual client.

Understand Your Client's Digital Intelligence and Build Out

If you find yourself in a position where you’re dealing with both of the aforementioned mentalities, we recommend taking stock of each client's digital intelligence to better understand their relationship with technology. For many, what comes across as an aversion to technology is really just a lack of understanding.

That said, there will always be fear in the unknown. So, start simple and build out.

Leverage Your Client’s Existing Reporting

While some clients – like Gen Xers and Millennials – will happily jump on the digital bandwagon, it’s important to give wary family members and end-clients ample time to become comfortable with the new technology.

If some of your clients seem less than enthusiastic about accessing their financial reports on a tablet, the best thing to do is to mirror their existing reporting experience. While this may seem redundant to a tech-savvy individual, you have to keep in mind that not all generations inherently understand – or trust – technology. So, when you begin to introduce the digital reporting tool, be sure to do so with a hard copy of their reports on hand.

If the client shows signs of skepticism or seems disinterested, use the paper reports to tether the data to a familiar source.

By creating a parallel between the client’s existing report package and the digital reporting available via the client portal, you reduce the risk of overwhelming your client and potentially turning them off from the digital reporting tool.

Start with the Basics

One way to do this is to grant limited access off the start. At a high level, you'll want to mimic the existing level of reporting detail to maintain consistency across the two reporting mediums.

For example, many digital reporting tools allow users to drill through summary-level data groupings to access the underlying details. Be sure to ask yourself, does the client's current reporting provide security-level or transaction-level detail? If the answer is no, make an effort to restrict the amount of detail that can be accessed inside of the client portal to avoid confusion.

When it comes to our platform, we typically recommend that family offices and financial institutions give their high-net-worth clients access to a subset of the available reporting tabs within the Archway Platform's client portal. We like to start with the Financial Overview Dashboard and the Document Manager tabs.

Financial Overview Dashboard. This screen provides clear visualizations of your client’s investment data in a comfortable, easy-to-consume format. Featuring dynamic charts, graphs and tables, this screen can be configured to show basic holdings and entity ownership or more sophisticated analytics like target-to-actual asset allocation and top performing investments.

Document Manager. This screen simply allows clients to download traditional PDF report packages that have been put together by their financial advisor or a member of their family office. In most cases, these report packages are the exact same reports that historically would have been printed, instead of provided digitally.

Since this feature represents nothing more than a new way of delivering your client’s reports and third-party documents, it’s easy to portray the client portal as a seamless extension of the existing reporting construct.

As your clients become more comfortable with the platform, you can begin granting access to other features upon request. By acknowledging that some clients may be less willing to adopt new technology, you can create a personalized transition plan to ultimately deliver a compelling reporting experience.

Become a Technology Advocate

Technology can be challenging for everyone, but that doesn’t mean learning new technology platforms should be made less of a priority. In fact, we often see that the family offices and financial institutions that fail to embrace client training largely undermine their technology investment.

If you’re well-versed in the platform and regularly position it as a solution to your clients’ problems, buy-in becomes organic. Here are a few scenarios where you can promote technology for the win through subtle client training:

On Available Cash

Client: I need to know how much cash is sitting in my accounts. We may need to liquidate some investments, I’m not sure yet. I have a meeting with a fund manager tomorrow afternoon, so I need an answer before then.

You: I can do you one better. Remember the Archway Client Portal we implemented? Let’s log into it and I’ll show you where to find that information right now.

On Reporting Customization

Client: I’m thinking about diversifying abroad through some foreign mutual funds. Where do we stand right now on our global allocation?

You: Let’s go through it in the client portal. All of your investments are tied to a security class called Region and you can toggle between the other security classes we set up like Asset Class and Sector. What percentage of assets were you thinking of allocating to foreign markets? We can create an asset allocation model so that you can compare your target to actual allocation from the portal’s dashboard as time goes on.

On Last Month’s Reports

Client: I met with my old business partner and he was asking if I’d invested in any interesting deals lately. Can you send me recent performance for all of my venture capital deals?

You: Sure. I’ll put together a report showing VC fund performance and drop it out in the portal’s Document Manager with some commentary on the investments. You’ll get a notification on your phone when it’s ready.

On Approving Bills

Client: I’m traveling to London for a few weeks and I don’t want to get behind on any of the expenses for the SoHo remodel. You’ll need my signature on the checks. What should we do?

You: Not a problem. As the invoices come in, we can set up notifications to go to you when I add new bills to the portal. Just log in on your phone, review the documents and approve them electronically. Alternatively, you can set up pre-approvals for the vendors working on the SoHo apartment so that we can auto-pay those expenses while you're out of the country.

On Data Security

Client: Why does Archway make me enter my password and a special code? This seems like a lot of work.

You: The special code is called multi-factor authentication and it’s there to protect your information. That feature is optional, so we can turn it off if you’d like but I would recommend keeping it in place to prevent your account from being compromised.

While not every issue can be solved by on-demand reporting and client portal technology, digital tools certainly lend themselves in your favor when it comes to being a reliable, timely resource for your affluent clients. As the transfer of wealth continues, make sure that your family office or financial institution is taking the necessary steps to remain relevant in the age of digital reporting.

Find out how Archway Family Office Services can help redefine the way your next generation of end-clients access and analyze their financial information using the Archway Platform's mobile client portal.

How Family Offices Can Get the Most Out of Their Technology Solution

You know how to prepare your family office for a technology implementation project, but do you know what comes after your organization is up and running on the new system?

For many family offices, successfully implementing a financial technology solution is a welcome boost to their operational efficiency.

Saddled with modern, integrated tools and automated processes, family office teams can be more productive and more accurate. But while financial technology is an incredible tool, it’s only as good as your ongoing commitment to maintain the solution.

In other words, it’s simply not enough to implement a fintech platform for your family office.

To help you get the most out of your technology platform, we’ve come up with three tips to help you maximize your financial technology investment.

Embrace Change

To some degree, implementing a new technology solution means having to relearn how to do your job on a new system. And while no one likes a drastic learning curve, the benefits of modern family office technology generally outweigh the inconvenience of learning how to use the new tools.

Case in point, when it comes to reporting, family office financial technology can benefit both your internal accounting and investment teams as well as your end-clients. That said, we acknowledge that nearly every family office has its own version of reporting and it can be easy to get hung up on legacy reports. But when you’re transitioning to a new reporting tool, particularly if the old reporting tool was Excel, formatting and layouts are bound to change.

To soften this transition, we encourage our clients to take a step back and consider the data: do the new reports tell the same story as the old reports?

Most of the time, the answer is yes. But we also acknowledge how difficult it can be to abandon that old workbook in Excel. Now this is where the embrace change part comes in. New technology offers you a blank canvas and while you can spend your time repainting the same picture, you can also put that time-consuming, medley of Excel-based charts and graphs to rest and introduce a new package of clear, concise reports.

To help ease the shift from old to new, we recommend making time to sit down with both your internal staff and the family members you work with to discuss the benefits of the new reporting tool, address any concerns and introduce the new reporting. By establishing value early on, you can expect greater buy-in and a quicker adoption of the new technology.

Never Stop Learning

As a part of our implementation process, we like to ask our new clients to create a list of roles and responsibilities.

Who will be using the system? What functions do they need to perform inside of the platform? What types of reports do they need to generate?

This information helps us train our clients on the functionality that is pertinent to their role. But one of the most common mistakes we see in the technology space is abandonment. Once the technology solution is implemented and the users know how to perform their job functions inside of the system, they settle into their routines and they plateau.

We tend to see this manifest in two ways: failure to stay up-to-date on the system’s capabilities and reluctance to address small issues that require manual fixes or workarounds.

Let’s start with the workarounds. An example might be a bank fee that comes in automatically every month that gets posted to the wrong account. Instead of manually fixing the entry each month, most technology providers would rather you reach out to the support team to help you fix the issue once and for all.

Put it this way, if you spend two minutes per day manually correcting the issue this means that over the course of the year you’re spending an entire workday using a workaround.

2 minutes per day = 10 minutes per week

10 minutes per week x 52 weeks = 520 minutes

520 minutes / 60 minutes per hour = ~8.5 hours per year spent on a workaround

Whether you spend an hour reverting the books to fix a bad entry or dedicate an hour to learning a new tool that allows you to achieve the same result more quickly, you ultimately save yourself 7.5 hours that can be put towards a better use of your time.

That said, you may never know new tools exist if you don’t stay informed.

Ongoing product education is key to maximizing your technology investment, but it’s on you and your teammates to take full advantage of the education opportunities your technology provider offers. Read release notes and product documentation, attend user conferences and networking events and, by all means, ask for training when it’s needed. These educational resources are designed to help you succeed, which at the end of the day is the number one priority of any fintech firm worth its salt.

Leverage Supplemental Tools

It’s the job of a salesperson to sell you a solution that goes beyond satisfying your basic requirements, so when you first begin implementing a new fintech platform, it can be easy to get ahead of yourself. It’s only natural to want to test drive your shiny new toy, but it’s incredibly important to establish a solid foundation before you begin tinkering with the bells and whistles.

Start simple with the core tools. Using the Archway Platform℠ as an example, this includes defining your chart of accounts, learning how to use the investment and bank account information delivered via automated data feeds and establishing your reporting output. This may also include more specific types of functions like cutting checks or tracking intercompany loans, depending on the scope of your initial requirements.

Once you’ve become comfortable with the essential tools of the system, you can consider some of the nice-to-have features that you were originally sold on. Examples of supplemental tools to consider include:

• Asset modeling tools that define investment allocation models and allow you to produce target-to-actual reporting
• Automated fee billing capabilities that automatically calculate and bill client fees based on a variety of asset-based fee calculation methods
• Budgeting tools that allow you to create multiple budgets that can be used for budget-to-actual comparison
• Client portal technology that provides an interactive, mobile reporting dashboard for family members and end-clients
• Reconciliation screens that enable you to compare position-level and account-level activity within the system against an external data source to ensure data accuracy
• Report batching and scheduling functionality that allows you to save report configurations and establish recurring report schedules

In addition to supplemental tools, some technology firms also offer ad hoc services that can be leveraged to help your team be more efficient. If you find that your organization is spending an inordinate amount of time reconciling data, paying bills or processing partnership allocations, it may be worth considering whether business process outsourcing could be a good fit for your team.

In our case, Archway Family Office Services offers a variety of outsourced services that our clients can use on a standalone basis or in conjunction with their in-house operations teams.

What’s Next?

Regardless of what technology solution you choose to implement, remembering these tips can help you and your team get the most out of your new fintech platform and ensure that your investment doesn’t go to waste.

Haven’t made a decision yet?

Get in front of your technology investment by understanding the full suite of technology and service solutions offered by Archway Family Office Services.

Why Family Offices and Financial Institutions are Partnering with Outsourced Bill Pay Providers

For a high-net-worth family, managing expenses is not always black and white. In many cases, families pay taxes on an array of domestic and international properties. They use local contractors and vendors to maintain these homes and they engage various accountants, attorneys, financial advisors and administrative staff to support them – all of which requires a sophisticated expense management process to track and pay for these complex expenses.

For financial institutions tasked with handling these activities on behalf of high-net-worth families and individuals, the process can be even more complex, the list of merchants can be exceedingly long and the amount of transactions can be overwhelming.

As a result, these institutions are looking to outsource parts – if not the entirety – of the bill payment process.

Why Outsource Bill Payment?

Outsourced bill pay providers typically offer a variety of bespoke products and services that oftentimes don’t exist inside of financial institutions today.

Ranging from invoice collection and electronic document storage to high-tech accounting software, mobile client portals and comprehensive expense reporting, these products and services allow private banks to enhance their suite of concierge services and deliver a bill payment offering that helps their clients better manage their expenses. Here are five ways outsourced bill pay providers add value to your HNW service offering.

#1 - Streamlined Automation

To facilitate the bill payment process, many outsourced bill pay providers leverage sophisticated technology specifically designed for wealthy families. The most sophisticated providers are able to offer electronic payment approvals, automated payment initiation and on-demand mobile expense reporting. This degree of automation eliminates the need to seek verbal or written approvals from your clients resulting in a quicker, more secure bill payment process.

#2 - Broadened Accessibility

Through advanced client portal technology, advisors and their clients can securely access their electronic accounts payable information and documents anytime, anywhere. Acting as a central repository for their aggregated bill payment details and important billing documents, end-clients gain a quicker view of their consolidated spending behavior.

#3 - Extended Scalability

Reputable outsourced bill payment providers employ teams of highly-trained accounting professionals. Ideally, wealth advisors get access to a dedicated team of subject matter experts that operate as a seamless extension of your organization. By allowing a team of industry professionals to manage the end-to-end bill payment process for you, you can put time back in your day to focus on your clients.

#4 - Improved Consolidation

Trying to manage and track all of your client’s expenses across bank and credit card accounts can be difficult. Through purpose-built tools and electronic data feeds, outsourced bill providers not only collect expense and payment information from an array of sources, but they aggregate and reconcile the expense activity to ultimately deliver clear, insightful reporting.

#5 - Enhanced Analysis and Reporting

Given the inherently complex expenses of wealthy families, it’s important to stay in tune with the frequency and magnitude of your client’s spending. After all, preserving their wealth is one of your primary responsibilities. Outsourced bill pay providers maintain a sole focus on measuring and reporting on cash inflows and outflows, which ultimately gives you the tools to perform sophisticated cash analysis and gain insight into your end-client’s spending behavior.

Outsourcing bill payment gives financial institutions the opportunity to differentiate their service offering to their HNW clients through purpose-built technology and a dedicated team of accounting professionals. More importantly, it helps financial advisors deliver clear, meaningful insight into their client’s spending behaviors and provide better cash management advice.

Are you ready to build a customized bill payment solution with an experienced service provider?

Find out how our outsourced bill pay service can help you and your financial institution streamline your bill payment process so that you can refocus efforts on what really matters: servicing your clients.

How Family Offices and Financial Institutions Can Leverage Reporting Technology

The ultra-wealthy market segment continues to increase year-over-year in both population and net worth. According to an analysis by Wealth-X, the ultra-wealthy population rose by 12.9% alongside a combined net asset growth of 16.7% in 2017 alone. As family offices and financial institutions begin supporting more family members with more money, it becomes increasingly clear that antiquated means of reporting – like spreadsheets and manual processes – cannot keep pace.

So how do firms move forward to meet their end-clients sophisticated reporting expectations?

They leverage financial reporting technology.

Breaking the Addiction to Spreadsheets

Client reporting is challenging enough without having to rely upon clunky, makeshift tools for tracking and reporting on your client’s financial position. We understand why your firm may not be jumping up and down at the thought of replacing your existing processes and spreadsheets in lieu of high-tech reporting. If you’re like many family offices, you’ve been using the same processes and spreadsheets for years, so it’s only natural to be content with the status quo.

Nevertheless, it’s important to consider the limitations that innately come with spreadsheets. Although easy to use and universally understood, spreadsheets are not intended to be the baseline reporting tool for complex family offices. Here’s why:

Reason #1 – Lack of Accessibility

An application like Excel isn’t designed to support live collaboration. In a family office, it’s quite possible that while you are entering data and running reports in one entity, a colleague may be doing the exact same thing in a different entity.

If that data sits in the same spreadsheet, whose entries get saved? Or, unfortunately, whose entries get saved over? With numerous individuals working on multiple variations of a spreadsheet, it’s nearly impossible to say which version is correct and most up-to-date – which is a recipe for reporting incorrect information.

Reason #2 – Lack of Scalability

Excel is highly customizable, but it’s not scalable across larger volumes of more complex data. And while you may be tempted to create complicated macros and formulas, the reality is that few peers exist in your organization capable of supporting these more complex mechanisms should they break.

Put simply, spreadsheets are not designed to be used in scenarios involving intricate ownership structures, various investment types, multiple currencies and sophisticated reporting requirements – all of which are trademarks of a modern family office.

Reason #3 – Lack of Security

Excel lacks the security and sophistication of purpose-built reporting databases maintained inside of world-class hosting facilities. When it comes to family office security, this goes far beyond password protecting your spreadsheets and locking your computer when you leave the office for the day.

If server backups, data encryption and vulnerability assessments aren’t a part of your security playbook, you’re not doing enough to protect the family’s personal and financial data, and you’re leaving your spreadsheets open to security breaches.

Adopting Family Office Reporting Software

When considering a financial reporting software, it’s important to define expectations across the back-office accounting and investment teams as well as the family members and their advisors.

Before you invest in a reporting software solution, it’s best to figure out what type of reporting you want to produce. We suggest starting with an evaluation of both your investment strategy as well as your current reporting process. A few key factors to consider:

• Asset Types. What types of assets are you reporting on? Should the software be able to handle both public equities and alternative investments? What about personal assets like homes, artwork and jewelry?
• Advanced Accounting. Are you able to track book and tax basis? Do you have a means of capturing and reporting on complex transactions such as mergers, spinoffs and splits? Do you need visibility into underlying tax lots? Do you use complicated inventory relief methods?
• Data. Where is your data coming from? Can the reporting engine receive data electronically from multiple custodians and managers? How is alternative investment data received?
• Performance Calculations. Do you need to be able to run time-weighted and money-weighted returns? If not now, what about in the future?
• Benchmarks. Do you currently rely on benchmarks to gauge investment performance? Does the software allow you to create custom benchmarks or are you limited to industry-standard indices?
• Report Generation. Can you automate report creation? Can you combine multiple reports into a single document? Will you be able to create a table of contents?
• Report Delivery. How do you plan to deliver the reports? Are you interested in email or client portal functionality?
• Customization. Do you need the ability to build ad hoc reports? Do you use user-defined investment grouping or categorizations? Do you need to control the branding of the reports?

Citing James Day, Managing Director of Peritus Investment Consultancy, WealthBriefing’s white paper on must-have reporting capabilities for modern wealth managers addresses the need for sophisticated reporting that goes beyond market values to incorporate metrics like asset allocation, fixed income characteristics and performance calculations.

But, more importantly, the article states that while all of these features lend themselves to better reporting, the core purpose of client reporting is to increase client engagement – which means providing end-clients with the information they want to see in a format that is easy for them to understand.

Finding the Right Tools for the Job

Investing in a reporting software that offers a wide variety of features and functionality will give you a greater degree of flexibility to adapt to your clients’ evolving interests and needs – with the end-goal being increased client engagement. We know that reporting requirements can vary greatly between clients, so to help you set the foundation we’ve outlined several reporting software features that frequently come up among prospective family office clients.

Standard Report Library

Oftentimes, a family office’s first instinct is to seek out a reporting solution that allows for absolute customization. However, they quickly find that starting with a blank canvas can be overwhelming, which can undermine the flexibility of the solution. To help clients become comfortable with the software, many technology providers offer a report library that contains a suite of standard reports such as traditional financial statements, asset allocation, investment activity, performance and risk reports.

With on-demand access to the report library, family offices and financial institutions can quickly analyze data to help them answer their client’s financial questions without having to create complex reports on the fly.

Having said that, it’s been our experience working with hundreds of family offices that no two clients are the same. We’ve taken that notion and built upon the report library concept, allowing clients to select from a list of parameters on each report – we call this controlled customization. With the ability to toggle between investment classifications, types of inputs, performance calculations and report layouts, family offices and financial institutions can easily configure reporting to meet the varying expectations of their end-clients.

Flexible Performance Reports

Not all reporting software is created equal and the topic of performance can further complicate the reporting landscape.

At the most basic level, you’ll find providers that focus on delivering the bare minimum – the kind of reporting that only displays transaction data and rarely aggregates positions across managers or custodians. These providers often lack the ability to provide detailed data at the position-level and are limited to simple investment types, like equities and mutual funds. Among these providers, performance may or may not calculated.

At the next level, you’ll find providers that offer data aggregation across multiple custodians, but provide limited investment analysis information and oftentimes lack an ability to properly track more sophisticated investments like hedge funds, private equity, derivatives and options.

At the most sophisticated level, reporting software providers have built functionality that allows users to measure performance across both public and private investments. These providers offer performance reporting that takes into account things like the timing of activity, cash flows, income, gain/loss, accrued income, pending trades and terminal values.

For many family offices, these providers are the only viable option given the ever-changing investment diversification strategies employed by the HNW population.

Automated Reporting

The ability to aggregate data into meaningful reports is the primary consideration when selecting a reporting software provider. But finding a provider with ease-of-use features in their platform comes in as a close second.

When evaluating reporting software providers, it’s important to consider whether or not the technology will make your job easier. With reporting software, you’ll certainly have more data at your fingertips, but if you can’t produce or deliver the reporting content efficiently, it will hardly add value.

Having the ability to combine multiple reports into a single document allows you to produce a customizable, comprehensive report package – your client’s complete financial picture. Combined with report scheduling and automation tools, you not only create an automated, repeatable internal reporting process but you also provide your end-clients with a predictable and familiar reporting experience.

Flexible Reporting Output and Delivery Methods

Before you select a reporting technology, we encourage you to sit down with your end-clients to understand their report delivery expectations. It’s important to recognize that reporting expectations may vary between generations. For instance, G1 may prefer in-person meetings with hard-copy reports and real-time discussion, whereas G2 and G3 may opt to access their reports on their mobile device while traveling abroad.

As you evaluate the technology’s features and functionality, make a point to ask about output options and delivery methods. Can you save reports to an external FTP server? Can you email reports directly from the application? Does the software provider offer document storage or client portal tools? Can the technology include interactive dashboard-style reporting?

As technology continues to evolve, so will your client’s preferences and expectations around the way they consume their financial information. By selecting a reporting software that can adeptly handle these requests, you will be better poised to successfully engage your client and maintain their trust.

Find out how Archway Family Office Services addresses complex reporting requirements for hundreds of family offices and financial institutions.

10 Types of Reports Every Family Office and Financial Institution Should Have in Their Toolkit

It’s no secret that providing the right financial reporting to your clients can be a time-consuming and demanding task for family offices and financial institutions. Not only are you reporting on complex investments and intricate ownership structures, but you’re dealing with multiple individuals that each have a unique set of preferences and expectations. Simply put, what works for one family member may not work for another.

At the end of the day – or week or month or quarter – producing a set of reports that captures the right information and, more importantly, can be easily digested by the end-client is critical to establishing transparency and building client trust.

Why Personalized Financial Reporting Matters

As technology continues to evolve and play a larger role in family offices and financial institutions, expectations to go beyond the “one size fits all” approach are heightened. Based on Wendy Spires' commentary from a Family Wealth Report article on high net worth client reporting, you lose your competitive edge if operating under a traditional financial reporting style.

Furthering this notion, Spires implies that adopting a personalized reporting construct for each unique client lends itself not only to higher client satisfaction and stronger relationships but also to better decision making.

As you begin evaluating personalized report packages for your clients, we encourage you to think about the story that you want to tell. Identify your audience and their expectations. Ask yourself:

• Who will be reading this report?
• What information is relevant to them?
• Will they get more out of a single page financial dashboard? Or do they prefer granular detail?
• Are they making decisions or just checking in?
• Will these reports enrich your client's understanding of their financial position? Or will they create confusion?

According to Spires, many firms consider progress in reporting systems as a means of pumping more information at family members rather than delivering the right information. But when this approach is applied universally across all clients, it can result in client disengagement. As she puts it, the better approach to client reporting is to provide your clients with visually compelling and useful information that aligns with their goals and ultimately helps them make better decisions.

Aligning Reporting with Client Goals

Finding the right set of reports for each client can be challenging. We recommend sitting down with each client to get a better understanding of their financial comprehension, their presentation preferences and their short-term and long-term goals. It’s equally important to acknowledge generational divides and how they can affect your clients’ reporting preferences.

For example, some clients may prefer hard-copy paper statements, while younger generations tend to have an affinity for mobile, on-demand reporting.

As your client’s advisor and financial caretaker, your responsibility is to provide a clear and honest financial narrative that helps them reach their goals and become a more active participant in their financial story.

To help you compose the right report package that speaks to your client’s financial goals and unique interests, we’ve identified 10 types of reports that every family office and financial advisor should have in their toolkit.

Financial Statements

Traditional financial statements like the balance sheet, income statement and statement of cash flows are certainly not for every wealthy investor. For some, these reports are lackluster and void of interesting information. But for the astute investor or former business owner, these financial position documents are a cornerstone piece of understanding the sustainability of their wealth. They provide a clear picture of what they own and what they owe along with current and future profitability.

Seems important, right?

Knowing that these inquiries may surface, family offices and financial institutions should always be prepared to address questions around the financial health of any given individual, household or legal entity – and financial statements provide the answers they need.

Net Worth

Family offices and financial institutions are acutely aware of the fact that high net worth individuals and families pose a distinct challenge when it comes to net worth reporting. Not only do they have multiple banking and custodial accounts, but they’re oftentimes involved in various investment partnerships, private equity and hedge fund deals, real estate properties and direct business ventures.

That’s still not taking into account their personal assets like homes, vehicles, aircraft, artwork and jewelry.

There’s no arguing that there are a lot of moving pieces, but that won’t stop clients from asking how much they’re worth at any point in time. In turn, the burden rests on you to leverage technology and outside resources to put together a snapshot that accurately portrays your client’s overall financial position – regardless of where those assets reside.

Asset Allocation / Exposure

Based on the 2018 Global Family Office Report prepared by Campden Wealth in partnership with UBS, family offices are continuing to iterate their investment strategies on an annual basis as they seek to balance wealth preservation with growth. As strategies change and allocations to specific asset classes, regions or managers fluctuate, it’s important to be able to track and report on these changing allocations at any point in time.

It goes without saying that you should be able to put together a variety of allocation and exposure reports that give your client a window into how their investments are performing against their investment strategy and its benchmarks. Being able to produce reporting that shows actual allocation against target allocation models, asset allocation history and investment exposure across various legal entities can go a long way in gaining your client’s trust and proving your worth as an advisor.

Activity and Holdings

How many shares of GE do I own across all of my investment accounts? What is the cost basis versus market value of my investments? How much cash flow are my investments expected to generate?

If you’ve ever had to answer questions like these, you already know how important activity and holdings reports are. Consolidating holdings across multiple custodians and managers can be difficult for high net worth investors and their advisors, but with the right reporting tools, you can do just that.

Not sure where to start? Consider evaluating a technology solution or outsourced service provider that uses direct data feeds to banks and custodians to help you collect, standardize and manage your client’s financial data.

Performance and Attribution

Performance and attribution are key metrics used by high net worth investors to gauge the success of their individual investments and managers. Research conducted in 2018 shows that family offices prefer to outsource the management of their equity, fixed income and hedge fund investments, while managing their private equity portfolio in-house.

This can add up to quite a few external players, which means taking on the arduous process of collecting performance details from several different sources and, in some cases, aggregating the data by hand. But performance is tricky and requires a degree of expertise that can’t necessarily be found in spreadsheets.

Instead, we suggest taking a holistic approach to performance analysis that focuses on consolidating your information across asset classes, managers, custodians and geographies and presenting that information in a single view. By leveraging sophisticated tools like performance reporting software, APIs and automated data feeds, family offices and financial advisors can create reports that represent the broader financial picture – not just the small slice of pie that is managed internally.

Risk Analytics

Gaining position-level transparency can be a difficult problem for family offices and financial advisors to solve, especially when it comes to separately managed accounts or alternative investments. But with more and more family offices seeking greater transparency into the risks associated with their overall investment strategy, it’s important for you to harness the power of consolidation.

By establishing a single database of investment information for your high net worth client, you can easily analyze the data across multiple dimensions – like asset class, manager and liquidity – to understand the underlying risks.

Additionally, with more technology firms providing visibility across widely-accepted risk metrics like Standard Deviation, Sharpe Ratio, Drawdown, Beta, Alpha, R-Squared, Correlation and Up/Down Capture, high net worth individuals and families are gaining greater access to institutional-quality reporting metrics.

Alternative Assets

Over the past decade, alternative assets have become a staple within the investment portfolios of wealthy families. Yet many advisors struggle to capture this piece of their client’s overall investment portfolio, and rightly so. With innately unique performance and activity attributes, alternative assets can be challenging to incorporate into traditional financial reporting.

With such unique qualities, many advisors turn to workarounds like spreadsheets and over-simplified single-line valuations on statements. But the truth is that this information doesn’t provide enough detail to really help clients understand their hedge fund and private equity investments. However, with the right tools in place, advisors can comprehensively track cash flow activity, fair market value, basis, performance, investment liquidity and fee structures.

The result? A well-rounded assessment of your client’s alternative assets and their role in the overall investment portfolio.

Fixed Income Analytics

Bonds and other debt instruments continue to be a significant player among many family offices’ investment strategies, on average making up nearly 16% of the family office portfolio. This means that the ability to deliver a snapshot of fixed income characteristics, accrued interest, cash projections and credit ratings is crucial to managing this important asset category.

Putting a system in place to capture details like par, market value, yield, duration and convexity – and, better yet, automatically calculate interest and amortization – can be an effective way to deliver clear insights into your client’s fixed income investments.

Budgeting and Forecasting

Wealthy or not, it’s important to know how much money we have – and will have – and how it’s being spent. But those can be difficult questions to answer when you’re working with high net worth individuals and families. From aggregating information across multiple checking and savings accounts to keeping tabs on investment liquidity and impending cash flows, family offices and financial institutions are responsible for meeting their clients’ high – and varying – expectations.

Whether your client needs to pay an unexpected medical bill, purchase a new home or procure cash for a new investment, preparing budget to actual comparisons and cash flow forecasts can help you quickly and accurately assist your clients when planning for small and large expenses alike, while keeping their sights on their long-term financial goals.

Expense Summary

Even for the average individual, it can be easy to lose track of how much cash you’re spending. For the ultra-wealthy, spending activities only increase in complexity from simple utility and credit card bills to household expenses for multiple properties, investment capital calls and even tax payments. Between the lengthy list of vendors and the endless transactions, family offices and financial institutions struggle to track, categorize and manage their clients’ spending behaviors.

Reports that offer insight into how much your clients spend, how those expenses are allocated and who is getting paid are all key to getting your arms around your client’s spending habits. Prudent expense reporting can also help ensure that both you and your client remain compliant with the family’s wealth preservation mission.

If you're interested in learning how to tailor investment reports using each client's unique financial knowledge and investment goals, download our Optimize the Creation of Performance Reporting white paper.